Today - Tuesday, March 3, 2015

Former CIA director David Petraeus will plead guilty to one count of unauthorized removal and retention of classified materials, and he could spend up to one year in prison.

He's currently the head of KKR Global Institute - a unit of KKR charged with figuring how macroeconomic trends and government policy will affect its investments - and KKR has issued a statement suggesting Petraeus will remain in his position.

The Costco co-branding deal adds a third leg to the Citigroup (C+0.6%) story, says analyst Vivek Juneja, upgrading the stock to Overweight with price target boosted to $58 from $54.

One of his concerns with Citi, says Juneja, has been tepid growth and loss of market share in key businesses like U.S. credit cards, and the Costco deal should reverse this worry. The bank, he assumes, was likely able to win a very competitive bidding process because of its ability to utilize its DTAs.

He's not boosting his EPS estimates just yet because Citi has not announced an agreement for Costco's $14B in estimated receivables held by AmEx, but he expects one should follow a la the Best Buy deal in 2013.

Turning to the stress test and CCAR, Juneja expects Citigroup to be approved for capital returns this year. He also expects the bank to hit its operating efficiency targets in 2015.

S&P expects Springleaf to have a stronger market position following the merger, but substantially higher leverage, and - depending on the details of the financing - the agency expects to cut LEAF's rating by either one or two notches. OneMain's rating will likely be lowered by a similar amount.

Efficient markets? The purchase of OneMain by Springleaf has been one of the market's worst kept secrets for some time, yet LEAF is higher by nearly 30% on the announcement.

"While it is clear that Fifth Third (FITB-0.6%) faces challenges, they also bring to the table a number of positives that we wouldn't normally expect from a bank trading at a discount to the group," says UBS analyst David Eads, starting the stock with a Buy rating and $22 price target.

He notes the bank had the lowest core efficiency ratio in his coverage universe last year (lower is better), and was second only to M&T in terms of ROTE. Further, FITB has been able to improve its efficiency ratio over the past two years even though revenue growth has been negative. "[It] makes us more confident in their ability to navigate this difficult environment."

1160 Hammond in the Perimeter submarket of Atlanta is newly constructed, and comprises 345 units with 16K square feet of amenity space. The property is in lease-up and is currently 44.6% leased with average rents of about $1,550 per month.

Part of a plan to please D.C. by helping to support low- and moderate-income individuals and neighborhoods, BBVA Compass launches home Ownership Made Easier, or HOME, in which qualifying borrowers will be able to take out 100% LTV mortgages. The lender will also contribute up to $4.5K for certain closing costs, allowing some to get a piece of the American Dream for far less than the security deposit on an apartment.

Adjusted book value per share of $24.87 vs. $24.05 one year earlier. Last night's close was $8.88, and management is getting very busy buying back stock at way below book value.

There were 3.3M in share repurchases in 2014, with 1.2M shares repurchased during Q4 at an average price of $9.44 each. Another 6.3M have bought back this year at an average price of $8.70 each. As of Feb. 26, another $133M remains in the authorization.

Under terms of the deal, owners of Alliance Bancorp (NASDAQ:ALLB) can receive either 0.28955 shares of WSFS Financial (NASDAQ:WSFS) or $22 in cash for each share of ALLB they own. Alliance closed at $17.51 last night.

Altisource Portfolio Solutions' (NASDAQ:ASPS) contract is with Ocwen (NYSE:OCN), not with the servicing, writes the Sterne team, and it thus loses every time Ocwen shrinks or sells assets.

The winners? Those would be the asset buyers: New Residential (NYSE:NRZ) and PennyMac Mortgage (NYSE:PMT).

The analysts write their note the morning after Ocwen Financial announced more MSR sales, and the hiring of advisors to explore strategic options. The team is suspending Ocwen EPS estimates for 2015 and 2016 "since we have no idea what the new Ocwen will look like." Sterne's best estimate of tangible book value is about $10 per share.

Citing a number of catalysts - the rescheduling of the company investor day, that settling the antitrust lawsuit will be difficult, and the chance of a negative CCAR result - Macquarie downgrades American Express (NYSE:AXP) to Underperform. The price target is cut to $76 from $81.

The purchase of Citi's OneMain Financial is expected to boost 2017 earnings by $470M, says Springleaf (NYSE:LEAF), which earned about $600M in the 12 months ending last September. The combined company will have nearly $14B in core consumer net finance receivables and almost 2K branches across 43 states.

The combined company will be led by Springleaf CEO Jay Levine and current OneMain CEO Mary McDowell, who will continue in that role. Both the Springleaf and OneMain brands will be initially maintained, before migration to just OneMain beginning in mid-2016.

Fortress investment (NYSE:FIG) - an owner of 73M shares of Springleaf - Co-Chairman Wes Edens: "We believe this is a compelling transaction, both strategically and financially. It brings together two companies with similar cultures and exceptional management teams, singularly focused on meeting the everyday financing needs of an enormous population of working Americans."

In a deal that's been talked about since Sandy Weill ran Citigroup (NYSE:C), Springleaf Financial (NYSE:LEAF) has agreed to purchase Citi's OneMain Financial for $4.25B in cash. The transaction is expected to close in Q3.

Citi's consumer finance unit, OneMain has been reported under the Citi Holdings unit, of which the bank has feverishly trying to work its way down to as close to zero dollars in assets as possible. In a presentation yesterday, the bank noted assets at Citi Holdings have fallen to just 5% of total bank assets from 32% in 2008.

Citi will use the sale proceeds to pay down Citi Holdings debt, and the bank expects to see earnings boosted by about $1B thanks to the deal.

For Fortress Investment (NYSE:FIG)-backed Springleaf (Fortress purchased LEAF from AIG in 2010), it gets a natural fit in a complimentary consumer finance business